WEBVTT

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Kia ora,

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we're back today

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talking about Megatrends.

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And as a reminder,

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Megatrends are indelible forces

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shaping the economy, politics, society,

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and the broader world that we're in.

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Not trends

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that are going to be a fad for this year

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and then disappear,

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but things that will have

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a fundamental consequence

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on the way that we live

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our daily

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lives and businesses need to operate.

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I'm excited

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that we're here today

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to talk about one of those Megatrends,

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the green economy.

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And with me here today is Richard Hobbs,

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a principal in BCG's Auckland office

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and the lead author

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on the Green Economy Report.

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Richard, great for you to be here.

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Thank you, Phillip.

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Great to be here, too.

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Now, as a start, let's just understand

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what is the green economy

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and how how do we think about it?

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Yes, so the green economy is any green

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infrastructure or green products

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and services

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out there that will be bought by consumers

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over the coming years.

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Cool, though, is this things like,

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you know, organic foods and things

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like that. You know what?

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What? Bring it to life for me.

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So it could be green construction

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or building materials,

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there could be green tourism,

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green construction,

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green energy.

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Really any products

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that have a minimal impact

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on the environment

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or at best actually

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improve the environment

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in their creation and development.

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And why is this a Megatrend

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and not just a trend?

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Well,

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it is definitely a Megatrend because

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as we all know,

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climate change is a very real

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and serious issue for our globe,

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so is declining species.

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And so it's very important

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that as humanity,

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we can ensure that we can,

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you know, support

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and still grow the economy,

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but while

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preserving and enhancing

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our natural capital.

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And I think we've seen

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a lot of that recently in New Zealand

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with some of the challenges

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around Cyclone Gabriel and the flooding.

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And that's made it really relevant

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and real to many people like

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it hasn't been.

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Yes, absolutely.

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No, this is a very real issue

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and it's not just happening overseas.

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And also the impact in some areas

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like emitting greenhouse gases

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that we have here in New Zealand

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impacts people all around the world

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as well.

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Anyway it's an interesting

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take that it's not just

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going to be a cost or a challenge,

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but that it's also an opportunity.

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Could you talk to me a bit about that.

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Yes, absolutely.

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So the green economy globally is roughly

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$3 trillion today annually.

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That's forecast

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to triple to $9 trillion by 2030.

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So grow very, very quickly.

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And we're already seeing this

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at the moment.

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Now, New Zealand

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is actually very well placed

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to compete well in the green economy.

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And this is

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because we've got

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this wonderful natural capital

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and natural resources which mean that

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people

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are drawn to New Zealand

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as a tourism destination.

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We have one of the highest

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renewable energy percentages in the world

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and we have got much more abundant

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available resources

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still to develop, which is fantastic.

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And we are naturally endowed

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with great forestry resources,

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which means we can have a thriving

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bio economy,

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sustainable construction,

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sustainable packaging

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and other products and services

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that can be derived from that.

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In top of many of our audience minds

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will be

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well, what does that mean for me

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individually, as a worker, as a consumer,

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or as a business owner

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Well, definitely for businesses

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it's about how you can find

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your source of competitive advantage

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in the green economy.

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So in the report, we outline five areas

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tourism, energy,

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construction, food,

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and consumer products.

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Now, depending on which

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part of the market you operate in,

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there are a number of opportunities

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there for businesses

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to identify

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how they can differentiate

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not just locally but globally.

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So, for example,

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you know, around food products,

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we already have the lowest carbon

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milk production in the world

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and we have an opportunity to,

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you know, take that to the next level

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and be a real standout

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in this green economy.

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And so is this

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just about growing revenue

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or is it more than that?

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Well, yes,

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it's definitely

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more than just growing revenue.

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I mean, there's

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a clear benefit for employees as well.

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I mean, we know from

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from our research as well

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in BCG that employees have a

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you know,

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are much more attracted

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to companies that are genuine

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about dealing with

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and contributing positively towards major

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environmental issues.

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Additionally, we know that

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it can create a greater

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affinity with consumers and stronger

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brand perception

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because consumers are now seeking

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they're looking for

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these sustainable products,

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often difficult to find.

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There's a lot of information out there,

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sometimes even greenwashing.

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So companies that can do this

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well and can do this

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through genuine environmental improvement

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can create that strong affinity

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with their customers.

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That's great.

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It sounds like there's

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a real positive impact

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on potentially top line revenue

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and even your employee affinity.

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But tell me more about costs.

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Won't

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this just raise the costs of the business

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and ultimately diminish profit?

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Yes.

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So there are three

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elements really to cost.

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So the first one is

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there are some great examples

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historically where an investment

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in our natural capital

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has really paid off.

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So, for example,

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the preservation

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of our environment

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and 100% pure

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New Zealand

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brand has been really very seminal

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in the growth of our tourism industry

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and has paid off in dividends.

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I think secondly,

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the cost of technology

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and particularly green technology,

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is improving so quickly.

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The cost of renewable

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energy technologies

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coming rapidly down the cost curve

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means that it makes sense

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now to be able

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to deploy

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some of these technologies at scale

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and profitably.

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And finally,

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the efficient use of resources

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is actually

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a productivity play in many ways,

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so that can improve productivity

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and the cost equation

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for businesses as well.

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Fascinating and

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it's really great to think about

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all the dynamics involved in this

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because it is quite complex.

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I know one thing that lots of executives

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I speak to say

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is that

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it is really exciting,

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but will consumers really buy into this?

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Will it really make a difference?

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like

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What do you think?

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Yes, it's

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a really good question

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and one that's

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definitely top of mind for executives.

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And I think, you know,

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we'll definitely have to wait and see.

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But,

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you know, I was in

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Europe recently

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and they're one of the

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first movers on the space.

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And certainly consumers

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are starting to pay premiums.

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And there are many companies moving there

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at a very quick speed.

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Companies like Nestlé,

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who have got

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very ambitious targets in place

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and they know

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or they have the faith

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that ultimately consumers will

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be willing to pay

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for these sustainability credentials.

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The other thing

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which really came through our report,

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as we're noticing

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an increasing trend

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in premiumisation or premium products,

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particularly across Asia

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with the emergence of the middle

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classes there.

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Tell me more

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like what is premiumization of products?

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Like help us understand that a bit more.

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What we're starting to see is,

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you know, in Asia,

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certainly there is this perception

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that New Zealand food

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is really a premium product.

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It's safe.

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You know, it's it's naturally produced.

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And so we can really play on that concept

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of the New Zealand brand

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and the New Zealand provenance.

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And I think when we add,

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you know, the sustainability credentials

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and in

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time as consumers

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preferences continuously evolve towards,

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you know,

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those types of product attributes,

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then I think New Zealand

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is really well-placed

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to capitalize on those opportunities.

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Hey, is there anything else in the report

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that you'd like to mention

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for our audience today?

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This is a huge Megatrend.

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There will be

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some countries who will come out of this

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as global superpowers. Now as New Zealand,

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you know, we are

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probably not in that position,

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but the pie will be so big

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that if we play to our strengths

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and we do what we do

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well in a few areas,

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we can create outsized impact

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and drive very significant

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economic growth

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and environmental improvement

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for our economy and country and society.

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Yeah,

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I think that idea around deaveraging,

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not trying to be the best at everything,

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but really

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sticking to your natural assets

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and where you can win in

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this space

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is going to be fundamental

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to New Zealand's future.

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Thank you so much for that, Richard.

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It's really great

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to have had this chat with you today.

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I'm

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sure everyone will love to

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read the report in detail.

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And of course,

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we're always happy to engage

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with those who are interested

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to learn more

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about the report

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and how it may be

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impacting your business.

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So please

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don't hesitate

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to reach out to Richard or myself.

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Thank you. Kia ora.